Wilson Corp Is Considering the Purchase of a New Piece

question 56

Multiple Choice

Wilson Corp is considering the purchase of a new piece of equipment.The cost savings from the equipment would result in an annual increase in net income after tax of $50,000.The equipment will have an initial cost of $600,000 and have an 8 year life.The salvage value of the equipment is estimated to be $100,000.If the hurdle rate is 10%,what is the approximate net present value?

• A)less than zero
• B)$100,000
• C)$500,000
• D)$46,826

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